The Stock Market
Both the "normal" and "weighted" equity-only put-call ratios have turned upward, thus issuing
sell signals. Moreover, our oscillator is hanging right on the brink of a sell signal as well. So,
should we turn massively bearish here? Market breadth isn't really bad, and small cap stocks
continue to perform okay.
Well, there's one other indicator, and it's the most important one, so we'll let it dictate our
strategy price! That is, if the markets break support, we'll go short in accordance with these
sell signals. However, if the market can't break to new relative lows, then we'd have to
consider these sell signals suspect.
The levels that we're concerned with are mainly 680 for $OEX and/or 1305 for $SPX. Thus, if
$OEX were to break down below 680, intraday, then we'd want to buy $OEX puts or bear put
spreads. As for the other put-call ratios, the $OEX weighted ratio and the NASDAQ-100
($NDX) weighted ratio are both on sell signals.
Moreover, the breakdown of the "normal" equity-only ratio into its two component parts NYSE
and NASD shows that both of those are on sell signals, too. About the only major broad
market put-call ratios that haven't rolled over to sell signals yet are those of the S&P 500
futures options.
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